The new high school will be built in full using borrowed money,
school trustees decided. However, even with financing options that
could generate $52 to $79 million for construction during the next
30 years, the district remains reliant on floating a bond to
finance the high school’s second phase, staff said.
Gilroy – The new high school will be built in full using borrowed money, school trustees decided. However, even with financing options that could generate $52 to $79 million for construction during the next 30 years, the district remains reliant on floating a bond to finance the high school’s second phase, staff said.
At a special study session Thursday night, the Gilroy Unified School District board of trustees unanimously but grudgingly moved toward borrowing $15 to $20 million in bond-like financial investments known as Certificates of Participation. The certificates would help bridge the $15 million district facilities deficit and build the first phase of Christopher High School. In addition, a district “five point plan,” which trustees said staff should explore, could garner enough money to purchase land for a new elementary school, make improvements to Rucker Elementary School and have a surplus of $30 to $54 million.
“I can support the (certificates) mainly because I think the alternatives are not tenable,” trustee Jaime Rosso said.
Alternatives to issuing certificates include not building the high school or building only part of the original design.
The district plans to repay certificates over the next 30 years through developer fees, which it has requested developers voluntarily increase from $2.63 to $6.61 per square foot of new building – or from about $6,500 to $16,500 per new home built. However, the district used a figure of $3 per square foot to calculate the repayment plan rather than the increased fee. The district wanted to be conservative in estimating how much it could borrow, Superintendent Deborah Flores said. The $3 figure is reasonable because the district can start charging $2.80 per square foot in early 2008 and many developers have expressed a willingness to pay the increased fee, she said.
By not overextending its debt, the district will not have to repay certificates by dipping into its general fund, which pays teacher salaries, Flores said. In fact, the certificates would contribute about $70,000 annually into the general fund because they could be used to pay off 1998 certificates that were used to finance Antonio Del Buono Elementary School and that have higher-cost variable rates.
Besides financing the new high school’s first phase – which includes 41 classrooms, two gyms, an aquatics center, a performing arts center and a cafeteria – the certificates could help with future construction needs, assistant superintendent of business services Steve Brinkman told trustees.
“I … recommend borrowing the maximum that we feel comfortable with because we still have other needs beside Christopher High School,” Brinkman said.
The “five point plan” depends on three other revenue sources besides certificates and the typical annual state and federal funds. It assumes voters will replicate Measure J – a 1976 parcel tax that will expire in 2012 – which could provide $20 to $30 million during 30 years. It assumes the district will be able to rezone a piece of land now used as a school farm to residential and sell it for a net $7 to $7.5 million. And it assumes the district can refinance a bond to gain $3 or $4.5 million.
The plan “not just deals with the immediate needs but also addresses what I call the intermediate-term needs,” Brinkman said.
In addition to completing the new high school’s first phase as planned, the district could use the revenue to purchase a 6-acre plot of land for a new elementary school, make $3 million in infrastructure improvements to Rucker and have about $30 to $54 million remaining for other construction projects.
“I do think we need to keep an eye on other things in the district,” trustee Pat Midtgaard said.
Trustees directed staff to explore the additional financing options, but did not set a timeline to make a decision on them.
While the district has worked out the current facilities deficit impasse, it might have another on its hands soon. In order to fund construction of new high school’s second phase – budgeted at $53 million, including escalation – and a new middle school by next decade, the district will have to return to voters in about five years for more money, staff said.
“Local financing will be necessary,” Brinkman said. “And that local financing is another bond.”
